Elizabeth Warren's Work Is in Trouble

Not long ago, the Consumer Finance Protection Bureau, the muscular brainchild of Senator Professor Warren, concluded an investigation that exposed the vast and richly appointed den of thieves at the Wells Fargo Company. In turn, this resulted in Wells Fargo CEO John Stumpf coming to Washington to get turned on a spit by the Democrats on the Senate Committee on Banking.

(And, in case you're wondering, the revelations have continued, including the news that Wells Fargo participated in a sub rosablacklist of its employees who refused to go along with the company's multifarious scams. Read the Planet Money transcript all the way down to the story of the old gentleman who couldn't buy a newspaper. It will get you looking for a pitchfork.)

There's a case in federal court involving the Bureau, and the judge delivering a decision today was a cat named Brett Cavanaugh, who has a political history that can best be described as, well, interesting. He worked for Ken Starr during the Great Penis Hunt of 1998. In this capacity, it was Cavanaugh who argued most strenuously that the graphic details of Bill Clinton's canoodling with Monica Lewinsky be included in the Starr Report. He also was involved in investigating the suicide of Vince Foster. According to The Washington Post, Cavanaugh was an armed pecksniff on the topic of the president's sex life.

"The narrative shows how pathetic Clinton is," Kavanaugh argued, "that he needs therapy, not removal. It's a sad story. Our job is not to get Clinton out. It is just to give information."

Yeah, right.

Anyway, Cavanaugh went on to a job in the White House with the Avignon Presidency. When C-Plus Augustus nominated Cavanaugh for a job on the bench, Democratic senators balked at first; Senator Dick Durbin called Cavanaugh the "Forrest Gump of Republican politics." Eventually, Cavanaugh took his seat on the appeals court bench in September of 2006. The following July, Senators Durbin and Patrick Leahy of Vermont accused Kavanaugh of misleading the Senate during his confirmation regarding what his involvement was in formulating the Bush administration's policy on the detention of people suspected of being terrorists.

Mr. Durbin asked Judge Kavanaugh about his role in screening the nomination to an appeals court of William J. Haynes IV, who was the Pentagon's general counsel and was involved in creating many of the administration's interrogation policies for detainees at Guantánamo Bay, Cuba, and elsewhere. "What did you know about Mr. Haynes's role in crafting the administration's detention and interrogation policies?" Mr. Durbin asked. Mr. Kavanaugh replied: "Senator, I was not involved and am not involved in the questions about the rules governing detention of combatants and so I do not have any involvement in that." In a news report first broadcast by National Public Radio, those comments were compared with an account last month in The Washington Post that Judge Kavanaugh had told colleagues in the White House in 2002 his view that Justice Anthony M. Kennedy of the Supreme Court would probably reject any administration claim that detainees were not entitled to lawyers. Judge Kavanaugh had served as a law clerk to Justice Kennedy. The Post account did not, however, place Judge Kavanaugh at what it described as the heated meeting where the subject was discussed. In a June 26 letter to Judge Kavanaugh, Senator Durbin said, "It appears you misled me, the Senate Judiciary Committee and the nation."

This has been a public service announcement from the management of this shebeen to remind you that there is an election coming up and that presidents appoint federal judges. We continue.

Since its birth as part of the Dodd-Frank financial reforms, the CFPB has worked like charm, clawing back over $11 billion to customers who have been scammed by various outposts of the financial-services industrial complex. This has made it a fat target from birth to various conservatives who believe that it infringes on the free-speech rights of con-men and the right of crooks to free assembly.

(Most notably, Tailgunner Ted Cruz has been one of the most energetic vandals in this regard. "Don't let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers," Cruz said. There are, of course, 11 billion arguments to the contrary.)

However, on Monday, a federal appeals court stepped in and did some of Cruz's dirty work for him. From Reuters:

The U.S. Court of Appeals for the District of Columbia Circuit threw out a $109 million penalty against PHH Corp in 2014, saying the structure of the Consumer Financial Protection Bureau gives its sole director too much power. The three-judge panel, though, also sought to remedy the problem by giving the president the power to fire the director, which it said made the position similar to the Attorney General and other constitutionally sanctioned agency heads who answer to the White House.

It could've been worse. The court could've tossed the CFPB entirely, and Monday's decision is likely to be appealed en banc to the full court of appeals. But the decision is ominous nonetheless. The way this agency works best, of course, is when it is insulated from political influence entirely, when its mandate is solely rescuing consumers from the fraudulent business model of predatory capitalism. What the court seeks to do, I fear, is to render the CFPB a toothless entity, the way that the FEC was defanged, or the SEC was during the run-up to the collapse of 2008.

In a statement in response to the ruling, SPW made it clear that this thought had occurred to her, too.

The CFPB has been, and will remain, highly accountable to both Congress and the President, and continued Republican efforts to transform the agency's structure or funding should be seen for what they are: attempts fostered by big banks to cripple an agency that has already forced them to return over $11 billion to customers who have been cheated.

In the previous Gilded Age, of course, the courts were the last redoubt behind which the predatory capitalism of the time could find shelter. When the Sherman Anti-Trust Act was passed in 1890, the business interests of the time went to war against it almost immediately and succeeded in weakening it in Farmer's Loan (1895). And, of course, it was through the federal courts of the time that the preposterous theory that corporations have 14th amendment rights was established in Wabash v. Illinois and, most memorably, in Santa Clara County v. Southern Pacific Railroad, a constitutional absurdity for which we still are paying a price today.

And then there was Lochner v. New York, the case on which various conservative legal scholars look backwards with great fondness. Speaking for the Supreme Court, which determined that New York's limits on working time violated the 14th Amendment, Justice Rufus Peckham explained that the personal freedom of New York's bakers to be worked to an early death should not be abridged.

There is no reasonable ground for interfering with the liberty of person or the right of free contract by determining the hours of labor in the occupation of a baker. There is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades or manual occupations, or that they are able to assert their rights and care for themselves without the protecting arm of the State, interfering with their independence of judgment and of action. They are in no sense wards of the State.

You can hear old Rufus chuckling mordantly behind the words of Federal Judge Brett Cavanaugh who, in ruling against the CFPB on Tuesday ,wrote that the agency:

"…poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency."

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